This paper presents a positive comparison of the outcomes of several alternative allocation systems (the queue system, convertible and nonconvertible rations, and the unhindered market) to distribute the limited quantity of a deficit good among heterogeneous individuals. The authors show that,...

The authors present new ways of looking at economic organizations andsystems. Individuals' judgments entail errors (they sometimes reject good projects and accept bad projects). The architecture of an economicsystem, specifying how the decision making units are organized togetherwithin a system,...

In a dynamic model of moral hazard, competition can undermine prudent bank behavior. While capital-requirement regulation can induce prudent behavior, the policy yields Pareto-inefficient outcomes. Capital requirements reduce gambling incentives by putting bank equity at risk. However, they also...